Resorts International Inc. v. NJM Associates

Decided: July 1, 1981.

RESORTS INTERNATIONAL, INC., A CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF DELAWARE, ET AL., PLAINTIFFS,v.NJM ASSOCIATES, A NEW JERSEY LIMITED PARTNERSHIP, DOING BUSINESS AS THE NEW JERSEY MONTHLY, ET AL., DEFENDANTS

Gibson, J.s.c.

Gibson

[180 NJSuper Page 463] This is a discovery motion which requires a resolution of the conflict which sometimes arises between the factfinding role of the litigation process and the privilege in favor of confidentiality for news sources. The facts which bring this issue before the court are not in dispute and may be briefly summarized. Plaintiffs instituted a defamation action as a result of an article which appeared in the May 1979 issue of New Jersey Monthly Magazine entitled "Surrender in Atlantic City." The article concerned itself with the circumstances surrounding the attainment by plaintiff Resorts of a permanent license to operate a

casino in Atlantic City. Among other things, the article indicated that Resorts was a "mismanaged, unscrupulous, mob-tainted company. . . ." and that as a result of a combination of improper influence and supportive treatment by the Casino Control Commission, bordering on complicity, the license processing was a "sell out." Following the commencement of the suit, and as part of the discovery process, plaintiffs served on defendants certain interrogatories and a request for the production of documents. Although many of those interrogatories were answered and certain of the documents were produced, a significant number were not -- defendants taking the position that the material was "privileged." Without relating the nature of each and every interrogatory in dispute, the main thrust of the defense position relates to those questions dealing with material obtained through "confidential sources" and those relating to the "editorial process."

Essentially, the issue raised by this motion is whether defendant magazine, being an entity engaged in and connected with the news media, has a privilege to refuse to disclose as part of this civil proceeding, the sources of its story and the editorial process which culminated in its publication. Defendants assert a number of positions in support of the view that the answer to that question should be "no." The privilege that it claims is asserted to be based on the First Amendment of the United States Constitution and the New Jersey Shield Law, N.J.S.A. 2A:84A-21. Generally, plaintiffs take the position that the First Amendment is not involved and that, although admittedly defendants are included within the protections of the New Jersey Shield Law, that protection has been "waived" in this case because of the defenses asserted, including "good faith," lack of malice, etc.

With respect to the New Jersey Shield Law, the issue raised here was specifically dealt with in the case of Beecroft v. Point Pleasant Print. & Pub. Co. , 82 N.J. Super. 269 (Law Div. 1964). That case also involved a libel action where the defendant newspaper resisted plaintiff's efforts at discovery. Relying

heavily on the Supreme Court case of Brogan v. Passaic Daily News , 22 N.J. 139 (1956), the court held that although the Shield Law would normally protect defendant from being compelled to supply the information requested, the pleading of such defenses as fair comment, good faith and reasonable belief as to the truth of the subject matter constituted a waiver of the statutory privilege, and accordingly the defendant was required to answer the interrogatories. One of the underlying theories of Beecroft and Brogan was that the privilege conferred on the news media is permissive and not mandatory, and thus the newspaper, or in this case the magazine, makes a choice as to when it will or will not invoke the privilege. Accordingly, when its own actions bring into question potential liability on its part to third parties, such as plaintiff here, it should not be able to pick and choose what it will reveal and what it will not reveal with respect to the information that bears on that liability. Brogan v. Passaic Daily News, supra at 152. It was noted in Brogan that to permit a defendant in a libel case to insulate itself from an inquiry into the sources of its publication could effectively deprive the plaintiff of the ability to prove malice. Absent such a showing, a recovery of punitive damages would be foreclosed. The court was unwilling to read such an intent into the Shield Law. Ibid.

Brogan , of course, was decided eight years prior to the landmark case of New York Times v. Sullivan , 376 U.S. 254, 84 S. Ct. 710, 11 L. Ed. 2d 686 (1964). Under the present state of the law a "public figure" must prove malice not only to recover punitive damages, but to recover at all. To establish "actual malice" in the constitutional sense requires a showing that the defendant proceeded with publication with knowledge that the material was false or with reckless disregard of whether it was false or not. Ibid. The rationale of Brogan is therefore more compelling today than it was then. At stake today is not merely the establishment of facts sufficient to establish a basis for punitive damages, but rather the survival of the cause of action itself. Cf. Carey v. Hume , 492 F.2d 631, 634 (D.D.C.1974).

The conclusion that the New Jersey Shield Law is not absolute in its granting of protection to those seeking its application was underscored in the case of In re Farber , 78 N.J. 259 (1978). Although the Shield Law was examined there within the context of a criminal trial, the court made clear that when the privileges contained in the statute are confronted by certain competing demands (in that case the constitutional right in favor of compulsory process for obtaining witnesses) the privilege must yield. That case did not involve the issue of "waiver," but it does refute the proposition that defendant is entitled to any absolute privilege based on the Shield Law. See, also State v. Boiardo , 82 N.J. 446 (1980).

Defendant urges that Brogan and Beecroft are no longer good law and should not be followed. However, absent some clear rejection of Brogan by a later tribunal of equal or higher authority, this court is not free to reject its ruling. Nor is such a suggestion persuasive on the merits. Plaintiff here has admitted that it is a "public figure" for the purposes of this suit and must bear the burden that that classification carries with it. Under the circumstances, the requirement for showing malice is clear. Questions of malice are normally subjective and thus require some examination into the thought process of the person accused. Plaintiff is therefore placed in an impossible position if it cannot pursue through discovery and at the time of trial the nature of that thought process, including the material upon which the article was based. Insofar as defendant relies on confidential sources, there should be an opportunity to inquire into the sources and the information actually supplied. Plaintiff should not be required to rely on defendant's version of the information which is critical to the establishment of the cause of action.

In addition to the general propositions previously related, the courts in both Brogan and Beecroft supported their rulings in favor of disclosure based on the conclusion that the defendants had "waived" the ...

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